SAN JOSE — The Silicon Valley office market is getting off to a good start in 2025, according to a new report that detailed improvements on multiple fronts in the region.
The vacancy rate fell, rents increased, and overall deal activity expanded in the South Bay during the January-through-March first quarter of 2025, Colliers, a commercial real estate firm, reported.
Nvidia headquarters office buildings at 2788 and 2888 San Tomas Expressway in Santa Clara. (Gensler, Jason O’Rear Photography)
These figures were an improvement from the October-through-December fourth quarter of 2024, according to the Colliers report, which provided an early peek at the region’s office market statistics. The report defined Silicon Valley as Santa Clara County and Fremont.
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Here are some key statistics that measured the performance of the South Bay office market during the first three months of 2025, according to the preliminary report:
— The overall office vacancy rate was 16.4% in the first quarter, compared with 16.6% in the fourth quarter. In the year-ago first quarter, office vacancy was 13.9%.
— Sublease space vacancy was 4.3% in the first quarter of 2025, compared with 4.7% in the fourth quarter of 2024 and 5.5% in the first quarter of 2024.
— Asking office monthly rents were $5.41 a square foot in the first quarter of 2025, compared with $5.36 a square foot in the fourth quarter of 2024 and $5.35 in the first quarter of 2024.
Tenant activity in the South Bay was strong enough that 333,800 square feet more space was leased or occupied than the amount of space that was vacated in the first quarter of 2025. This is also known as positive net absorption.
In the fourth quarter of 2024, 118,900 square feet more space was filled than was vacated in the South Bay, Colliers reported.
The two most recent quarters represented a sharp improvement compared with the trends for several prior quarters in the South Bay office sector.
“Net absorption was positive for the second consecutive quarter following six quarters of occupancy losses,” Colliers reported.
